6.

Amy is a wealthy philanthropist, who owns a vineyard in Kent. She wishes to make a number of
donations and asks her friend Otto to act as trustee. Otto agrees. Amy writes and signs a declaration
with the following provisions:

a. £300,000 to fund new activities at my vineyard. On weekdays, research into the possible
therapeutic qualities of our new brand of rosé wine is to be undertaken by scientists from
King’s College London. The results of this research are to be published for free on the
vineyard website and promoted with television advertisements.

Has there been a validly constituted trust?

1) 3 certainties
a. Intention- yes.
b. Subject matter- £300k put in part of a separate bank account for trust money.
c. Objects- no ascertainable objects- purpose trust. If it is private it will fail for
being contrary to the beneficiary principle (unless it falls within an exception)
but if it is charitable it could succeed.
Is it a valid private purpose trust? No- not within the exceptions or indirect
beneficiaries under Re Denley. Could it be a conditional gift under Re Osoba?
Is it charitable?
S1(1) Charities Act 2011- must be established for charitable purposes only. S2(1)-
must fall within s3(1) and is for the public benefit under s4.
S3(1)- could be under s3(1)(b) for the advancement of education- if the wine is
therapeutic then this could be valuable research. But Re Shaw- mere increase in
knowledge not enough to be charitable, needs to be combined with
dissemination of knowledge- which it is as the results are published for free and
promoted on TV. But whether it is educational depends on the evaluation of its
quality and usefulness (Royal Choral Society v IRC)- how useful this is is
questionable bc it is only about their specific brand of wine so its seeming to
promote the company rather than educate others (see comparison with RCS).
Could fall in s3(1)(d)- advancement of heath- prevention of sickness through
therapeutic stimulants?
Also needs to meet public benefit requirement-
i. Nature of the purpose must be beneficial to the community
ii. Must benefit a sufficient section of the public

b. £500,000 to purchase land in Sussex to establish stables for retired and injured racehorses,
including my own horse Chucky. My ten best friends (listed in an appendix to this
declaration) and I are to be able to visit the estate whenever we want to ride the horses. In
addition, local children whose families are in receipt of social security benefits are to be
entitled to ride the horses on Saturdays for a fee of £50.
Ascertainable beneficiaries? Not really bc the £500k is to purchase land for the retired and
injured racehorses. But could it be said that there are indirect beneficiaries through the 10
friends being able to come onto the land and ride the horses- comparison with Re Denley
where maintenance of land for the benefit of the employees was valid bc the employees
 were indirect beneficiaries through their entitlement to use and enjoy the land. Means there
would be people with standing to enforce the trust so it could constitute a private express
trust? But what about the other beneficiaries- the local children whose family gets social
security benefits. Discretionary trust- once local is defined, it would satisfy the is or is not
test- seems to be an issue of conceptual certainty as to what local means but that could
probably be established (esp as in Re Baden (no2) all that was needed was for a sufficiently
large number of people to be said to be inside the class). Not administratively unworkable.
Not a private purpose trust under the exception in Re Dean/ Pettingall as it is for injured and
retired racehorses in general as well as her own.
Can’t be a charitable trust bc it is to benefit 10 identified people as well as others- infringes
personal nexus rule bc those benefitting are linked as friends.
Formalities? Trust of personal property (money) not a trust of land, although the end goal is
to buy some land with the money, so don’t need any formalities under s53(1)(b) LPA 1925-
would have that anyway as it is manifest and proved by some writing bc Amy has written a
declaration.
Validly constituted as she has transferred the money into bank accounts in Otto’s name.
c. £10,000 to fund a campaign to increase public awareness of the problem of dog kidnapping,
and to create a new, specific criminal offence of “dog theft” with severe punishments.
Dog kidnapping- could be charitable?
Must be exclusively charitable- this cannot be as it is partly political. Anti-vivisection- the aim
is achieved when a change in the law occurs to create a specific criminal offence- court
cannot say whether this is or is not for the public benefit.
d. £70,000 for a separate fund, to be invested and any return is to be used for exclusively
charitable purposes.
Decrease in the value of the shares- has there been a breach of trust that Amy can recover
the money for?
Issue is whether it is a charitable trust bc if it is, she doesn’t have standing to sue, only the
charity commissioner can.
Say it is private as the original money doesn’t have to be applied for a charitable purpose
and we don’t know if it would benefit a sufficient section of the public etc. Trustee has a
duty to take reasonable care in making investments- TA 2000. S1- general power to invest.
S4- when investing must have regard to the standard investment criteria- suitability and
diversification. S5- Advice- trustee must get such advice from a professional as to how the
power of investment should be exercised. Didn’t get advice, nothing to suggest he is a
professional trustee, no reason to think advice is unnecessary or inappropriate, also didn’t
consider diversification. In breach of such duties. Ethical investments- Palestine Solidarity
Campaign- can take non-financial considerations into account provided that doing so would
not involve significant risk of financial detriment to the scheme and where they have good
reason to think scheme members would support their decision.
Nestle test for breach- wouldn’t meet it.

She lists her ten best friends in an appendix.

Amy then transferred £830,000 into a dedicated bank account that Otto had set up for provisions a-
c, and £70,000 into a separate account for provision d.

Otto recently saw a television advert for “EcoInvest”, a company that promises high returns on
investments that support the environment and animal welfare. He decides to invest the £70,000
from the separate account with EcoInvest on behalf of the trust. He does not ask Amy for her
opinion, but assumes that she would agree. The shares are now worth £20,000.

Last year, Amy made a donation of £100,000 to the Alzheimer’s Society, which is a registered charity:
she did this partly because she thought that it did important work, but also with the intention of
claiming tax relief in respect of the donation for her income tax bill. She made that claim and
received the requisite reduction. Amy also assumed that she would be able to claim tax relief in
respect of any charitable donations made this year, and has planned her various financial
arrangements in anticipation of that. However, she has just discovered that the government, in
response to difficult fiscal circumstances, has introduced a new provision in the latest Finance Act
that will mean that anyone who claimed tax relief in the previous tax year is unable to do so on
donations in the current tax year. Were it not for this provision, Amy would have been able to
reduce her tax liability for this year by £250,000.

Mistake.

Advise Amy.